Ha, ha, ha! I’m an American–we can’t even get rid of the penny and the dollar bill.
Seriously, a “cashless society” model would hit ENORMOUS resistance in the United States. What proponents of the cashless model see as a feature–“Every transaction would be ‘transparent’! You couldn’t do black market stuff like crime anymore!”–would be seen as a massive drawback from opponents, and not only from people who wish to buy and sell illegal drugs or cheat on their income taxes. A huge chunk of the American population would scream bloody murder over privacy issues and the increase in the ability of Big Government and Big Business to monitor what ordinary Americans are doing. That would come from both the anti-government Right (libertarians and many conservatives) and from the pro-civil liberties and anti-corporatist segments of the Left. (And a vocal minority of Americans would probably think the idea literally had something to do with the End Times.)
And in America a proposal like this would almost inevitably wind up being used to screw over the disadvantaged segments of society (poor and uneducated) who don’t have bank accounts and who already get screwed over by check-cashing companies and “payday loans”–another reason for the Left to oppose it.
I’m pretty sure that bitcoin was an intellectual exercise, that a programmer wrote it as a proof of concept for how to do a peer to peer currency. It works great as something people can slap together to show you can do it, but has major real world issue like an absolute limit on the number of transactions per second and the ever-increasing blockchain (history of every transaction on the network) that has to be sent to the client.
Unless you just want to collect bitcoins for the sake of having them, you’ll need to purchase real goods or convert them to real currency at some point, which ties your real identity to a bitcoin wallet, and once you’ve got that exit point you can then trace back every transaction for every bitcoin in that wallet fairly simply.
True, but perhaps a third or more of all the hundred-dollar bills are circulated overseas, both for legal and illegal transactions.
After the Europeans announced they would eliminate the 500 Euro note (without introducing a replacement note), I read a suggestion that the US do the same thing.
And if those overseas holders of USD100 notes could simply wander into their local bank either deposit them or exchange them for 2xUSD50 or similar then that is neither particularly onerous or costly.
Now maybe somebody with a bundle of a few thousand USD100 notes to exchange might be reticent about making the transaction public. Which might be a good thing.
I am simply debunking the hyperbole of “global financial chaos because the USD is the international settlement currency”
I still use cash a fair amount. My doctor (who can legally charge for certain things, like filling out driver’s (re-)licensing forms and a few other things), my foot care specialist, my chiropractor, my barber, the guy who sells high-quality meats, the cleaning lady, the snow clearance/lawn care guy, the student fund-raisers who sell samosas at $1 a shot, none of them take plastic, although several take cheques.
That is the part that I still don’t understand. I can walk into a local bank or even supermarket and ask for $100 in cash out of my account. I generally like $20 dollar bills because they are the easiest to spend but I will gladly take a $100 bill too. Like they say, it all spends the same way. I don’t give a shit. $5000 in tens would be a pain to count but they also work just as well as anything else and they are even more unconspicuous if you just slip them into normal spending.
I don’t know a whole lot about the street value of rupees but I can easily buy just about anything reasonable with rolls of $20 bills that will fit in my pocket. We aren’t talking briefcases or car trunks here. If I wanted to buy something truly expensive like a stolen Ferrari illegally, I wouldn’t buy that in $100 bills either. There is other ways to do it.
It still sounds like a solution in search of a problem unless they just freely admit that it is for government tracking purposes and to provide a guaranteed failed solution to a dysfunctional tax system and economic system in general. I agree that would not fly in the U.S.
ISTM the Indian effort is aimed at stomping on small time black marketeers while leaving the billionaires buying Ferrari’s unscathed.
It sure sounds like lots of posters aren’t understanding the actual Indian idea. Imagine if tomorrow the Feds started releasing bright red $20 bills. They are legal tender just like the old ones. Then they said that all the old green $20s would cease to be money on 1/1/2018. So you need to take any green $20s you may have to the bank and trade them in for red $20s at one for one. Or not, it’s totally your choice. But if you kept any green ones they’d be worthless a year from now.
The money and its value isn’t changing at all. The paper bills are being replaced en masse. You can have just as many reds as you turn in greens with no questions asked. Of course, the rules about CTRs still apply, so if you bring in more than $10K worth your name and ID gets sent to the Treasury. Where it *might *attract scrutiny if your cash stash is big enough.
*That’s *what the Indians are doing, more or less. They’re not, and we’re not talking about, eliminating cash as such. Just about flushing out existing stashes of cash. Not confiscating them, but making them known to officialdom.
That makes more sense but I still don’t agree with it just like almost everything India does. I am sure that they have the concept of keeping lots of money ‘under a mattress’ just like some people do in the U.S. How could you even begin to prove that all of that money is legitimate and built up through hard work and diligent savings over decades as opposed to taking bribes from tourists or selling drugs?
Real criminals around the world are much better at moving around money and assets than the average, law-abiding person so it still sounds like a fool’s errand to me.
Once the bills are exchanged, what is to stop the same thing from starting all over again?
ETA: If you are sitting on a pile of illegally gotten cash, all you would have to do is buy everything you might need in the near future in advance (it doesn’t matter if it is cars, clothes, cases of Cognac or whatever else). That might cause an economic spike or even inflation in the short-term if the effect is very large but it still leaves the underlying problem untouched.
People were doing that (buying stuff in advance). This article from the New York Times describes how some people paid their maids or their yoga teachers or their personal trainers upfront for the next year. Others went to jewelry stores or luxury clothing stores to buy something expensive but ideally get a backdated receipt.
Great minds think alike. Well, not really great - this is just basic common sense. I am glad to see the Indian people using it even though their government can’t apparently. Money laundering 101 isn’t immoral in cases like this - it is simple self-protection and it isn’t surprising at all that they came up with the almost obvious ways to work around a terrible government policy.
This whole thing is sounding worse and worse to me the more I learn about it.
As was mentioned, over 2/3’s of US $100’s are estimated to be outside the US (one post mentioned 1/3, 2/3’s+ seems to be the standard estimate). So any demonetization policy by the US for $100’s would be aimed mainly outside the country. Why? is the simple question. And the simple cost is the loss of future seigniorage (the profit from issuing 0% perpetual bonds) when overseas holders switch to some other store of value. And the simple overwhelming political backlash is by the other 1/3 holders in the US.
IME only a few very goo-goo (‘good govt’) statist types support messing around with the currency like this ‘for the common good’. The usual idea is a bit different, to eliminate higher denominations. The Indian policy is not that, since larger bills will now be issued (2000). It’s rather the attempt at a one time requirement to pass the existing cash hoards back through the banking system and presumably detect illegal source or tax evasion. But either way I think it’s interesting to delve into why someone in the US would think this was a top level problem to spend attention and political capital on rather than other problems.
Back to the OP, the US (and other rich countries) probably would be in a better position to follow up all the leads generated by people turning in piles of old cash for new. But the overall cost/benefit just isn’t there. Corruption and tax evasion are challenges to the US economy and society but it’s arguable they aren’t as big challenges as overbearing govt policies generally. And even if one believes ever bigger and more intrusive govt is always better, it’s still debatable how big a problem tax evasion and corruption are in the US. They are more of a problem in the US than in the ‘cleanest’ advanced quasi-tribal countries (Nordic etc), but not the same threat to prosperity they are in India.
Your own cite shows “As of May 30, 2009 … 165,372 remaining $1,000 bills [were known to exist].”
In the 1980’s I sat at a Blackjack table in Atlantic City where one of the players presented a $500 note whenever he needed more chips. (I traded him five $100’s for one as a souvenir.)
Apparently Modi printed larger bills (even better for hiding ill-gotten gains) simply because the mint couldn’t print fast enough, and a 2000 rupee bill would take as much time to print as a 500 rupee bill.
Despite the uproar, the policy was (at first) popular in India as it was seen as virtuous. However, people have trouble exchanging the bills and even spending the new bills. There’s other articles about how hard it is to make change with the new large bills (since even though the rupee is not worth much, most purchases are low value).
I would think the US would be more competent at that sort of thing (eg printing enough appropriately-sized bills). Whether this would be accepted by voters is another story.
In a sense,. it does happen. The US changes the design of the $100 bills every few years, so a person proffering a stack of old-style bills is immediately suspect.
There are a lot of countries in the world where the lodal currency is so suspect or unstable, that US dollars are in wide circulation and you can buy almost anything with US bills, no questions asked. But quite ofted, US $100s are refused if they are not of the current design series. Last year, I had to pay a penalty for changing a flight ln Emirates Airlines at the checkin desk at the airport, and they refused an older $100 and asked me for a new one. In Somaliland, the only currency in circulation is the US dollar, even $1 bills, and when I tried to pay for a coke with a US dollar, I was told that it was “soft” and I was asked for a crisper one.
(Nitpicker note: Somalliland does have its own currency, but the highest denomination is less than 1-USD, and they are used only for making change, since there is no practical way to import and circulate US coins. The same in Cambodia.)
